Is the Sharing Economy Exploitative?

Is the Sharing Economy Exploitative?

08/24/2018Per Bylund

There's a whole lot of buzz about the sharing economy. Many seem to think it is something new, with some calling for a 'new economics' to explain it while others deride the 'gig economy' as a higher level of exploitation, inequality, and poverty. Neither is a good analysis.

First things first: the sharing economy was facilitated by advances in technology alongside consumer preferences changing from goods to services and thus from ownership to lease. These are not separate processes, but mutually constituting changes where each increases the other.

The advances in technology that brought about the sharing economy are those that allow for cheaper, faster, and more accurate communication, verification of factual claims, decentralized corroborated trust/reputation etc. They overall lower transaction costs by making information both available and trustable. The terrifying idea of 'getting into a car with a stranger' is no longer a problem if that stranger's reputation can be tracked, is publicly available, and is backed up by the experiences of many others doing the same thing (as with Uber, Lyft).

The availability of such information also means we don't need to rely only on first-hand (or second-hand through family and friends) trusted experience, but can, as it were, rely on the experience of unknown others - third-hand trust. This changes our behavior because the cost of making a mistake is much lower: getting into the car of a shady Uber driver is on average much less of a risk than doing the same as a hitchhiker or even taking a regular taxi. This change of behavior in response to 'outsourced' trust means the technology can progress further.

The sharing economy, as the term implies, also means we can 'share' (make available) productive resources in much more effective ways. In a sense, it undermines the materialist view of value creation by dissolving the difference between 'personal' property and private ownership of the means of production: your personal car can now be both your personal property and your source of income - and you, as the owner, decide when and how. It doesn't change the economic categories, but releases the economic analysis from the material goods.

This is all well and proper, since the economy is about the creation and distribution of *value* and not of material things. As value is subjective, so is the distinction between consumer good and production good. Everything can be both, and what is what depends on how you use it.

In other words, the effect of the sharing economy on the study of economics may (and likely is) the liberation of economic analysis from materialist biases. Economics becomes the subjectivist social science it was always meant to be. So in terms of economic theory, the sharing economy can help make the study of economics what it should be and always should have been: the study of the creation and distribution of [subjective] value and the unplanned social orders that emerge in the prosperity-creating process.

But what about exploitation?

I find the argument that the 'gig economy' makes people accept lower wages highly fascinating. Suddenly it is a problem to these critics, mainly on the left, that 'workers' own their own capital.

When personal property becomes capital, a source of income, then the obvious implication is a decentralization of capital ownership.

I'm not saying companies like Uber are in any sense perfect. They could certainly go further, by e.g. implementing free pricing between drivers and riders. Why not allow drivers to set their required minimum to provide a ride? Why not allow riders to set their max to get a ride? (This may actually be the next step in the sharing economy - an open-marketization of fares and fees.) The common argument that drivers (which is usually the example used) don't make a 'living wage' is also a bias that remains from the materialist and industrialist view of economy. It assumes that a job is all about the salary, and that what matters is the monetary outcome of it. But many of those who choose to drive for a ride-share company do so because it is a *flexible* type of work, which is itself a value.

Sure, it may not be as high-paying as 'full-time' employment, but any choice includes a trade-off of value: to many, flexible work hours make up for the lower pay; for others, it doesn't - so they instead seek traditional employment. The solution to the low wages in the sharing economy is not regulation, but more competition - and proper market wages. In fact, the reason ride-sharing companies can pay low wages (which, judging from my discussions with many a driver, exceed those earned by taxi drivers!) is the regulations already in place: primarily the barriers to entry in ride-sharing and elsewhere that keep overall wages down by providing employers with artificial influence (power). The expected outcome of the low-transaction cost economy should be the ultimate gig economy, where all or most hierarchies (such as firms) dissolve into market relations - and where those who (choose to) work earn a market wage. What stands in the way for this development is not employers or even capital owners, but those artificial restrictions that produce their privilege.

It is a sad irony, really, that those restrictions - regulations - that are intended to protect workers from employers (in the industrial age) is what stands in the way for worker liberation in the new era.

Formatted from Twitter. 
Image source:
Flickr
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Liberty in Our Lifetime: Lessons from Prague

11/29/2022Robert Aro

In a city that looks like Paris meets the Iron Curtain, with nice restaurants, city tours, and where I was even able to shoot an AK-47 at a gun range (after going through training and while under supervision), I attended the 2022 Liberty in our Lifetime event in Prague. Last month the “City of 100 Spires” hosted an international gathering of who’s-who of libertarians, Austrians, and others in the free market crowd. Parallel Structures, referring to the creation or use of a voluntary system instead of or in replacement of an involuntary one, was the conference theme, a concept foreign to most, but not for long.

Cryptocurrencies exemplify this idea. For better or worse, cryptocurrencies are used for exchange when two parties do not want to transact in a national currency. Bitcoin is probably the most well known parallel structure, but this can be applied to any new system which attempts to escape the State’s monopoly of force.

Homeschooling is another parallel structure. Consider that property taxes are typically used to support State sponsored schooling. But schooling for some is socialist indoctrination for others. For those able and willing, homeschooling offers a viable solution; the caveat, like all parallel structures, is that the onus is on the individual for success or failure.

Fortunately, little things have a way of turning into much bigger things. With the emergence of parallel structures, their continual implementation and eventual growth provides solutions the world desperately needs, with the possibility of eventually supplanting the State entirely. One day, we may very well find ourselves living in the world's first Free Private City, as written about by Titus Gebel in his book Free Private Cities, who also presented at the event.

There appears to be two methods these structures can be implemented. I alluded to this a few weeks ago, about how something needs to change or else socialism will consume us all.

Either we change the system from within, or remove ourselves from the system entirely; if not by internal change or external flight, eventually we’ll be consumed by it.

At the conference, there were some groups wanting to create private dwellings in the ocean on moveable pods which could be physically joined to form communities. There were other groups promoting the “digital nomad” lifestyle, for those who have the option of living and working in various countries across the globe. The idea of flight is understandable, and historically a winning strategy under repressive regimes, in which a societal transformation seems all but impossible.

However, there were also those who wanted to stay, essentially fighting the government to better society. One non-profit organization in South Africa called Sakeliga describes itself a “club of businesses, professionals and investors together taking up their constitutional duty to resist state power, help establish a just commercial order, and form thriving trade and financial networks.” I was fortunate enough to meet the Executive Director Russell Lamberti, an Austrian economist, author, and investor who has written several articles for the Mises Institute. In his presentation he made it clear that South Africa is his home, and his organization intends to use litigation and all legal means to thwart government corruption and overreach.

The involuntary nature of government will always make it a force for evil. The real question is whether it’s possible to escape the system through fleeing or fighting it head on. Luckily, the beauty of a parallel structure is that its potency can transcend physical location. Wherever in the globe it is being implemented, it will always act as a force against State power through competition.

No one size fits all approach works best. But if some in the liberty crowd seek greener pastures elsewhere, while others seek to change society from within, the rise of parallel structures, such as work, media, culture, education, finance, and eventually a political or social system itself, will continue to exist as a beacon of hope.

Combine the rise in these new structures against the inevitable failure by the State, there becomes a real opportunity this decade to create a monumental shift towards a voluntary society and to find that “unbridled capitalism” we so long for.

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Zelensky’s Well-Documented History of Crushing Dissent

11/29/2022Liam Cosgrove

The following is a long-forgotten story regarding the true nature of Ukrainian President Volodymyr Zelensky’s attitude towards free speech. Zelensky has been lionized by the western press since the start of Russia’s invasion, but in the not-so-distant past, many international human rights organizations and concerned Ukrainians were sounding the alarm on dangerous and anti-democratic patterns of behavior exhibited by the President.

Here is what happened…

“They [Zelensky Administration] believe that it is possible to return Donetsk and Luhansk to Ukraine by force,” read a headline from Ukrainian news outlet Newsone in December of 2021. “Only a suicide and a narrow-minded person [could believe that].” The article is quoting Viktor Medvedchuk, owner of Newsone, who is criticizing the President for reneging on his campaign promise of finding a peaceful solution to the conflicts in Eastern Ukraine, an issue BBC reported was Zelensky’s “number one promise.”

On February 3, 2021, President Zelensky circumvented parliament to enact sanctions on three television stations believed to be affiliated with Medvedchuk, a leader of the Opposition Bloc party and duly elected member of parliament. The channels were immediately taken off air, including Newsone. Zelensky also sanctioned the air travel company used by Medvedchuk and pressured American social media companies like YouTube and Facebook to deactivate the accounts of Medvedchuk-affiliated companies, which they ultimately did.

Justified by Medvedchuk’s ties to Putin, these actions were nonetheless widely condemned by international, European, and Ukrainian human rights NGOs. Free press advocates like the International and European Federations of Journalists (IFJ and EFJ), who collectively represent hundreds of thousands of journalists across 140 countries, jointly denounced the decree, calling it “an extra-judicial and politically motivated ban and a blatant attack on press freedom that must be urgently reversed.”

A division within the United Nations (UN) released a statement declaring that the decision had not been made by an impartial authority and lacked proper justification and proportion. The National Union of Journalists of Ukraine (NUJU), a group that has repeatedly condemned Russia for today’s invasion, openly criticized the 2021 sanctions, “Depriving Ukrainian citizens of access to media without a prior trial and banning hundreds of journalists and media outlets of their right to work is an attack on freedom of speech.”

Medvedchuk, still a sitting member of parliament at the time, attempted to create a new media organization called First Independent. Zelensky dissolved the outlet a few months later.

Gross negligence on the part of Ukrainian law enforcement also became a central issue internationally and was flagged by US intelligence agencies. A 2021 US State Department report on Ukraine blamed “government inaction in solving crimes for the emergence of a culture of impunity.”

“Government authorities sometimes participated in and condoned attacks on journalists,” the report went on, citing credible allegations that “the government prosecuted journalists in retaliation for their work.”

Doubling Down

Ignoring international backlash, on August 20, 2021, Zelenksy passed broad sanctions against various digital media publishers, yet again without parliamentary involvement. Strana, one of Ukraine’s largest outlets at the time with 24 million visits per month, was a primary target of the sanctions. After its primary url (strana.ua) was cut off, the outlet was forced onto another domain (strana.news), which is still forbidden in Ukraine. Strana’s viewership dropped by more than 94%.

Human rights organizations once again found the justification of “pro-Russian” ties uncompelling. The previously mentioned journalistic freedom cohorts, IFJ, EFJ, and NUJU, issued a shared statement calling the decree an “extrajudicial action” and lambasted it as a “threat to press freedom and media pluralism in the country.” The EFJ further specified that “Strana.ua is one of the few remaining opposition media in Ukraine.” Freedom House, an American pro-democracy non-profit once chaired by Eleanor Roosevelt, urged US President Biden to take a stronger stance against Zelensky’s actions. “Zelensky continues to use executive power, without judicial review, to sanction media outlets, tech platforms, journalists, and websites under the pretext of fighting disinformation,” the group said in an open letter to the US President.

Perhaps the most interesting target of the August 2021 sanctions was Anatoly Sharij, a Kyiv-born journalist and blogger with a devoted Ukrainian fanbase who founded a political party in his name in 2019. The “Party of Sharij” received nearly 10% of the vote in some localities during Ukraine’s 2020 national elections with several candidates attaining office at the city and regional levels.

Anatoly Sharij, in a photograph taken in Spain, where he lives. Credit: El Independiente

Sharij was forced to flee persecution by Viktor Yanukovych, a past Ukrainian President whom many western media outlets accuse of being aligned with the Kremlin. Far from exhibiting “pro-Russian” sentiment, Sharij strongly condemned Putin’s invasion back in May, stating in an interview with Spanish publisher El Independiente, “The war is an aggression and invasion by Russia against the Ukrainian people.”

A UN-affiliated organization investigated Zelenky’s sanctions against Sharij and concluded “Sharij is misportrayed by the authorities as a journalist being pro-Kremlin, pro-Putin, pro-Russian Federation.” At a conference in Brussels, Sharij shared his belief that Donbas and Crimea are part of Ukraine but disagrees with Zelesnky’s approach to the conflict. In response to being painted as a Russian sympathizer, Sharij said, “The Ukrainian government comfortably uses such labels against anyone who expresses any criticism… I have the right to criticize the corruption of the president and the government.”

The Party of Sharij was among several political parties disbanded by presidential decree at the start of Russia’s war, a decision upheld by Ukraine’s Supreme Court without opportunity for further appeal.

In the Words of Ukrainians

A local perspective on Zelensky’s press relations is provided by a Ukrainian outlet now familiar to many westerners, The Kyiv Independent, whose Twitter following rocketed from just 11,400 followers a few weeks before the invasion to more than 2.2 million as it provided English-speakers around the world with live war updates.

Having been celebrated in Forbes earlier this year for their reports on Russian war crimes and op-eds calling for western sanctions against Russia, it’s difficult to portray the outlet as pro-Kremlin. Before the invasion, in January 2022, The Independent published a piece titled “How Zelensky's administration moves to dismantle press freedom in Ukraine.”

“The past four months have seen a surge of attempts to control the media,” The Independent reported, highlighting the government's pattern of behavior characterized by “threats of criminal prosecution against media outlets and journalists.” Condensing the Zelensky presidency in a single sentence, the author wrote, “Instead of improving its dialogue with the press, Zelensky’s government decided to take a more direct route: amplify supporters and pressure critics into silence.”

Rethinking Our Support

As we consider the image of Zelensky portrayed not only by numerous human rights groups but by his own citizens and compare this to the version pushed by western media, we should also reconsider our continued military support for the President.

In an environment rogue missiles land in Poland and blame is tossed around in a hysterical frenzy, nuclear war is a real possibility. Nuclear war means billions dead, the end of modern civilization, and perhaps the end of humanity. Is that risk even remotely commensurate to the benefits of ensuring one corrupt despot maintains power over eastern Ukraine instead of another corrupt despot?

I don’t see how anyone with minimally functioning cognitive faculties would have a hard time answering this question.

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It Beats the Alternative? Let's Think about That!

As people get older, we sometimes hear them joke that it beats the alternative, which is usually left unsaid.

There’s another sense in which the alternative is assumed to be far worse than one’s present condition: The type of government almost all people live under, which is the state, here used in the Max Weber sense of an entity successfully claiming a "monopoly of the legitimate use of physical force within a given territory.” As bad as states might be — the argument goes — it certainly beats the alternative, anarchy.

Really?

Is it possible states create the conditions normally associated with anarchy, thought to be a condition of widespread chaos and lawlessness? If we look at history, we find evil in government. It violates every notion of human decency and justice, though there are degrees of difference. A few examples may serve to freshen our memory. 

The current war in Ukraine brings to mind Stalin’s imposition of starvation on the Ukrainian people in 1932-1933, as part of his collectivization of farming, which according to this study resulted in an estimated 4.9 million total deaths. Stalin seized Ukrainian crops and grains as punishment for failing to meet quotas and for resisting collectivization. Also known as the “Great Famine, or Holodomor (extermination by hunger), Ukrainians suffered unspeakable horrors at the hands of Stalin’s “collectors.” 

Peasants accused of being food hoarders typically were sent off to prison, though sometimes the collectors didn’t wait to inflict punishment. Two boys who were caught hiding fish and frogs they’d caught, for example, were taken to the village soviet, where they were beaten, and then dragged into a field with their hands tied and mouths and noses gagged, where they were left to suffocate.

Stalin’s wife, Nadezhda Alliluyeva, committed suicide in late 1932, which according to playwright Mikhail Shatrov stemmed from her violent disagreement with Stalin over his murderous policies. 

Anarchy would have been a blessed option for Ukrainians had they been able to free themselves from Stalin’s grip. Given the power of today’s left-dominated governments and the global push for a Great Reset, humanity’s ultimate horror may still lie ahead.

Is democracy the answer to state growth?

One could argue that democracy — people power — prevents the rise of totalitarian regimes. A researched analysis of the fraudulent covid pandemic, however, where Western governments turned authoritarian overnight and most people obeyed, scraps that idea.

The state, as sovereign, de facto outlaws genuine democracy. 

Doubt it? How about a vote on the income tax or the state’s official counterfeiter, the Federal Reserve? Not a chance. Our bipartisan overseers won’t allow it. Even worse, thanks to government schools and the state’s official propaganda ministry, most people are at peace with government theft as long as standard euphemisms are applied, such as Treasury’s “taxes” and the Fed’s “accommodation.”

By the way, have you, a non-government citizen, been consulted about the tactical advantages of limited nuclear war? No? How do you like that arrangement?

According to most dictionaries, synonyms for anarchy include lawlessness, disruption, turmoil, disorganization, and disintegration. This is a fair description of conditions in the US and other countries during the so-called pandemic. Such terms also describe countries being bombed back to the stone age, such as Iraq and Afghanistan, where “righteous” states have intervened to eradicate evil or “defend the freedom” of their clueless citizens thousands of miles back home.

Turmoil also depicts the current state of Venezuela, where “dangerously softhearted” World Vision says that

One out of every three Venezuelans is food-insecure and in need of urgent food supplies, according to the World Food Programme (WFP). Once-eradicated diseases like cholera and malaria have returned, and children are increasingly dying of causes related to hunger and malnutrition. . . .

Venezuelan migrants who returned to the country after losing their jobs abroad in the wake of the pandemic have been unable to earn wages back home. Shortages of fuel, electricity, and clean water have sparked riots and left many migrants with no choice but to flee again.

Even Zimbabwe, once the poster child for hyperinflation, is at it again as the Zimbabwean dollar “has been devalued by over 40% since the beginning of the year.” To avoid another currency collapse, central bank governor John Mangudya has inaugurated a program allowing Zimbabweans to exchange their dollars for gold coins. 

Gold, the hallmark of a fully free market, meaning a society that enforces property rights, is coming to the rescue of Zimbabweans. Apparently, when corruption runs its course, some states will try anything, even a temporary return to honest money.

Given what the US state and its coalition partners have done to small countries, to American military personnel, to the cultural climate of peace and liberty that makes civilization possible, it’s hard to imagine a stateless America would be even worse. 

What makes our leaders “great”?

Lincoln, Wilson, and FDR are not renowned for their anarchist views. Through the state they had the means to go to war while forcing others to do the killing and dying. Through the state they had the propaganda tools and the arms to keep most of the public compliant. Through the state they had the means to steal wealth from their citizens to pay for it. Even today, with their crimes detailed online, they remain among the “great” in American history because of a pliant public and a state-controlled media and educational system.

It wasn’t anarchy that produced the massive death and devastation of the two world wars. It wasn’t anarchists who built atomic bombs. It wasn’t anarchists who dropped them on civilian populations.

And it’s not anarchists who've created the conditions for nuclear Armageddon today.

It beats the alternative?

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The Kultusgemeinde and Its Relevance to American Anarchism

11/23/2022Kyle Stephens

Among the many practical issues facing anarchism there is one that attracts the biggest amount of criticism from minarchists: the size of a community. They point out that we do not live in a Hutterite or Anglo-Saxon but urban and global society. As such, size matters. As a settlement grows larger, libertarianism becomes harder to enforce as a covenant. Small communities are easily formed outside the urban matrix, they are not easily sustained on an economic level.

For example, a libertarian community might have a population of 150 people. If a reasonable small business employs a minimum of 25 people, there could only be a total of 6 businesses in that town. To attract additional labor implies if not settlement, nearby arrangements (i.e., company towns and hamlets). If this is the bulk of all its employment, it wouldn't matter. There are only 150 customers to attract, thus little profit to encourage such a business expansion in that community to begin with.

Certainty reigns, so does opportunity cost. Though amassing great company encampments outside the covenant community could become profitable, there is a big metropolis a few miles away that is inhabited by millions of people. Where is the entrepreneur going to go?

Worse, these encampments or company towns amount to enlarging your covenant community. Most bigger cities are actually smaller quarters, separated by wealth or racial characteristics and enjoined as one later on. Suburbs formed from a massive migration of workers to the rust belt. Over time, suburbs became metropolitan areas in tandem with an independent city that is controlled by singular municipal statesmen.

None of this is mitigated with automation or technology either. Companies could invest in it with cloud computing and the like, that would eliminate the issue of opportunity cost previously discussed. However, lacking production means the need to import most goods.

Now, trade makes that easy but that is flawed in a covenant community. Importation implies transportation. If there are top few customers in this small covenant and a large metropolis boasts many, the cost to transport this product is likely greater than what minimal revenue comes from sale. Thus, opportunity cost remains a burden as not only production but importation crash.

The Owenite communes died out for one big reason: people lacked opportunity and sought it elsewhere. It is easy to suggest that this fate was a consequence of its economic model and for sure, communal living does fail. However, it is naive to assume we are in the clear with size in mind.

Though economics are technically secondary to libertarian theory, a community whose population all emigrates makes attempting it fairly futile. Economics in that sense does matter to our success. How could this problem be addressed? Easy.

Within any larger city, there are separate neighborhoods and boroughs with similar characteristics uniting them each. If these became covenant districts, the city itself is only a geographical assembly of covenants. However, labor and capital flows more practically between them. As such, it is sustainable and requires no modification to the broader covenant approach.

This might appear an only minor addendum, but I find the examples most intriguing for it. In areas such as Vienna, Orthodox Jewry tends to live together but differently than he might in Poland with his shtetl. While any gated community is plumbline covenant, these operate with mutual aid in mind (as an extension of religious identity).

Its pricing is not a donation, but mandatory like a tax. This keeps it relatively homogeneous, not only in culture but class too. It is too easy to ridicule that word, "tax" until you realize it is no more an obligation than the bylaw your covenant binds you to. In fact, the covenant most typically proposed by anarchists on the right - though devoid of taxation mention looks more like a social "contract" than a voluntary community (3). Voluntary, it is insofar as you do not need to live there. That is already the way by which a social contract operates, this only excepting its positive law component.

That this too, is basically a social contract, I do not accept as I believe they turn into states with time. Rather, I propose an easy alteration to it. First, let's understand how these orthodox communities factor in interests. As is the deal with any other typical covenant community, misbehavior means expulsion. However, mutual aid in our typical model covenant community is detached from that contract and only intended as a mitigative measure to be encouraged in lieu of welfare.

If mutual aid is basically a given, the Orthodox Jew loses it once he misbehaves. He loses it however, because he got expelled altogether. In my proposal, misbehavior does not necessarily result in your expulsion (this could vary by the heinousness or pettiness). However, the misbehaving party is no longer eligible for mutual aid. Is that all? No. Though he is no longer, ceasing payment does in fact mean expulsion. He pays and does not receive; this payment then goes to the victim party.

That is not all. So, in a Frankpledge, bylaws are per se voluntary too. This sounds insane, but it isn't. In them, those who opt-out of the covenant bylaws are not eligible to go to court and it could even implement social credit to classify him as a parasite. Essentially, he no longer abides by the community conduct but is totally ostracized for it.

Not all people receive aid, but everyone pays in. But the needy paid in over the years, having already explained residents pay an expensive fee to live here. What if someone does not pay in more than once or twice, now he receives?

First, leeching would qualify as a misbehavior in the code. Second, how is this defined? Well, two ways. One, new residents might not be eligible for its receipt but only after they have resided there for a number of years. Two, such aid has a time constraint (e.g., a year's worth). Those who are eligible for aid may at no time receive for longer than one year at a time.

After that year, they must pay it back. They pay it back in a way that is very similar to tax deference. If you do not pay it back, you are expelled. Think there has to be a limit on how frequently you may receive these years’ worth of aid? No. What happens if you, an insured driver gets into an accident? You pay a higher premium, being that you are a risk to the insurance company. Well, every time a resident here eligibly receives aid, the amount of money he is expected to pay back (in addition to the regular fee) is increased more and more.

Not only does this act as a dual vetting process for immigration, but it also then increases the odds that you get expelled for exploitation. Being as it is voluntarily contributed, mutual aid appears to already have its built-in mechanism against exploitation (i.e., people do not enjoy being exploited). However, collective finance means he who contributes does not decide who might receive.

He might, be it operated by its members with transparent books or in that a mismanaged charity alienates its contributors who then move to a competing organization. That risk has not discouraged charities today from doing so, they simply try not to get caught. If that is to happen, so too will a popular demand for its regulation. An anarchist society is only stateless, it cannot outlaw that a state be invented. As such, what in this public choice analysis feels unfashionable makes it no less relevant.

If the social contract does not in stateless form become a state, it remains collective. In his book, Democracy: The God that failed, Hans Hermann Hoppe addresses voluntary individual behavior as pertains the use of his or her own property. He addresses this, not only as pertains use but permission to invite and so forth. However, his covenant is only stateless and not voluntaryist. Autonomy is a voluntary description of inhabitance or association but that is with the use of property, all. Auberon Herbert described it differently, much closer to the Frankpledge that I have previously outlined.

There could be elements of both these visions, especially regarding mutual aid and whether to have it at all or that of immigration already incorporated in the Kultusgemeinde that I example. Nonetheless, options are worth exploring if we are to attract the more hesitant anarchists screaming tyranny at the former.

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Counterfeit Inclusivity

11/22/2022Robert Aro

In a recent speech, one of the lesser-known Fed Governors, Philip N. Jefferson, discussed the importance of having a home:

Beyond location, a home provides both basic needs, such as shelter, and invaluable benefits, such as a sense of personal safety and dignity. It is a refuge in which our minds and bodies can recuperate and regenerate so we are prepared to participate in all aspects of life, including the next day's work. The costs of living in disadvantaged areas or of dealing with financial hardship can be seen in all areas of life. Higher stress, the frequent necessity of working more than one job, the absence of benefits, and the time and money spent commuting—all these exact a financial and psychological toll.

On some level, he must understand that most Americans are under tremendous financial hardship, given the increase to both the cost of living and interest rates.

He asked the question:

What can the Fed learn from research on opportunity and inclusive growth?

Then tried to elaborate further what this meant:

The better we understand the channels that affect the health and function of the overall economy, the better we can calibrate our policy decisions to deliver on our dual mandate.

Continuing:

In pursuing its dual mandate, the Federal Reserve is essentially trying to foster and maintain the conditions in which the economy and all its participants can thrive.

And again:

Pursuing our dual mandate is the best way for the Federal Reserve to promote widely shared prosperity.

For well over a hundred years the Austrians have documented the economic problems a currency monopoly creates. Even beyond the mechanics of money creation lies moral, ethical, and legal considerations. The summary to Bastiat’s The Law, provides a succinct account:

The question that Bastiat deals with: how to tell when a law is unjust or when the law maker has become a source of law breaking? When the law becomes a means of plunder it has lost its character of genuine law. When the law enforcer is permitted to do with others’ lives and property what would be illegal if the citizens did them, the law becomes perverted.

Bastiat, as one of the proto-Austrians, or predecessors to the school, shared countless ideas which have always remained relevant. Hayek built upon this idea, explaining one of the problems with central planning:

The economic planning which was to be the socialist means to economic justice would be impossible unless the state was able to direct people and their possessions to whatever task the exigencies of the moment seemed to require. This, of course, is the very opposite of the Rule of Law.

What the Fed has successfully done over the last century is normalize one of the biggest crimes of the century: Counterfeiting.

Not a day goes by where the Fed is not mentioned on all business channels. Whether it’s CNBC, Bloomberg, on TV, or in print, a significant amount of effort goes into talking about the Fed, what they will do next, and how they may help or hinder the economy. Mainstream economists seem to revere the Fed, with the institution being widely incorporated into their dogmatic beliefs.

But let’s never forget: The Fed is a counterfeiter.

Should one individual try to pass even $100 of fake note as legal tender, they may face grave punishment. And depending on how large the scheme, the individual could face consequences stiffer than murder charges. Yet, when the Fed prints billions to trillions of dollars, not one in a thousand economists think anything of it. If anything, they’ll applaud the inflationary policy.

Like democracy through the barrel of a gun, or dropping a bomb for freedom, the words and actions of a central planner are usually diametrically opposed to each other. If the Fed was serious about helping the poorest members of society, wanted to ensure more “inclusivity,” and really wanted Americans to know the joy of home ownership and the pursuit of the American dream, then the best thing it could do is to stop everything it is doing today. If they really cared, they’d surrender to the rule of law, and not the law of the central planning authority.

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How Secession Solves Our Problems: On the 'Crisis Magazine' Podcast

11/18/2022Ryan McMaken

I joined Crisis editor Eric Sammon to discuss secession and my new book Breaking Away: The Case of Secession, Radical Decentralization, and Smaller Polities.

 

From the discussion: "Secession should really just be thought of as one form of political decentralization. In America, we’re pretty familiar with the idea of decentralization overall. Most people call it federalism. ... Americans get the idea of decentralization overall, but what of course they forget is that America’s past is founded on the idea of a more radical version of decentralization, which is known as secession. And so secession took place during the American Revolution, which was a attempt for these 13 sovereign states to secede from the larger empire."

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Did Constitutionalists Gain in the Last Election?

11/18/2022James Anthony

What matters in every election is what progress has been made by constitutionalists.

Constitutionalist voters and politicians have formidable difficulty getting constitutionalists past the Republicans’ Progressives. Progressives are helped by state primary processes, party rules and practices, crony media buys, and legacy-media support.

Even so, constitutionalist voters are in the majority. And constitutionalist politicians, who would earn Conservative Review Liberty Scores of at least 80 percent pro-liberty, went into this election making up around 27 percent of elected Republicans.

The slow turnover of senates and the results of the Republican primaries each guaranteed that this election would bring little increase in liberty in the near term. But next steps were taken towards improving elections, increasing the number of constitutionalist voters, and improving the choices in constitutionalist politicians.

Progressive Incumbent Politicians

The unfolding Great Inflation II has been brewing for a long time. Since 2008, the true money supply has increased by an astounding 303 percent. This dwarfs the Great Inflation I 1960-1978 increase of 176 percent, the Financial Crisis 1995-2007 increase of 128 percent, and the Great Depression 1921-1929 increase of 62 percent.

The Great Inflation II lockdowns, and the recent covid portion of its true money supply increase, an unprecedentedly rapid 120 percent, came under much the same Republicans as now, and Trump.

Going into the Republican primaries, the future senate’s swing vote could have at-most improved from Susan Collins, who had been voting 20 percent pro-liberty, to Mitch McConnell, who had been voting 44 percent pro-liberty.

Going into this election, the current house’s Republican leadership promised far-too-little, and could be counted on to deliver even less.

Election Problems

This election brought even-more-glaring disparities between reliable polls and the vote counts recorded by election officials in numerous precincts.

A kind of natural selection is in progress. Republican state politicians are ultimately going to have to either use their constitutional powers to ensure that voting is untainted, or go extinct and get replaced by new politicians who will use their powers.

Newly Independent Voters

Various voters in the past had been Democrats but, in this election, supported Republicans.

These voters were motivated by economic factors and social policies. Even if they identify as Republicans for now, most will really function as independents, since what drives their voting is that they are economic and social refugees.

Most such refugees’ backgrounds are from cultures, whether foreign or domestic, that have long accepted bigger governments. Any economic refugee’s vote for a big-government Republican Progressive will be a temporary setback, until the refugee sees the natural consequences of this action and learns how to stop getting burned. That will happen sooner or later.

And meanwhile, many economic refugees already arrive with intuition that will help them recognize Progressives, and determination to choose constitutionalists. Constitutionalist voting is growing.

Constitutionalist Politicians

Toward the end of Trump’s time in office, Liberty Scores of at least 80 percent pro-liberty had been earned by 8 percent of that house and 6 percent of that senate. At mid-2022, these had increased to 17 percent of that house and 14 percent of that senate. Given the favorable retirements and the probable losses by some of the worst newcomers like Dr. Oz, when the dust from this election settles, we will likely see that the proportions of constitutionalists have increased further.

But keep in mind that to even block a veto override takes 33 percent of one house. To enact legislation requires 50 percent of a house and a senate, plus a willingness to stand up and be counted using constitutional simple-majority voting in a senate, plus a presidential signature, or else requires 67 percent majorities in a house and a senate.

Change toward constitutionalist governance can come much faster under Constitution-following, emotionally intelligent executives. On this score, this election brought the clearest improvement.

This election made the next president less likely Trump and more likely Ron DeSantis, Rand Paul, or Thomas Massie.

More evidence on election integrity, new independent voters, and a better future president—in a single mid-term election, constitutionalists made helpful progress on many fronts.

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Fedcoin: It Starts with a Trial Run

11/17/2022Robert Aro

A cashless society would be the nail in the coffin for liberty and freedom, offering centralization, the likes of which Marx could only dream. The existence of a government backdoor or spyware becomes a real possibility, and given the State’s track record, a real likelihood. Then, of course, the ability to track, freeze, and even set expiry dates on money, will be marketed as “features” to protect the public.

As for the 5.9 million Americans considered “unbanked,” i.e., those who have no checking or savings accounts, (the poor, weak, and vulnerable) they can expect life to get more difficult. This is the price we pay for free market intervention.

Earlier in the week, the Federal Reserve Bank of New York made the announcement:

Members of the U.S. Banking Community Launch Proof of Concept For A Regulated Digital Asset Settlement Platform

The explanation may only make sense for those well versed in crypto technology:

Members of the U.S. banking community today announced the launch of a proof of concept (PoC) project that will explore the feasibility of an interoperable digital money platform known as the regulated liability network (RLN). Using distributed ledger technology, the proposed platform would create innovation opportunities to improve financial settlements and would include participation from central banks, commercial banks of various sizes and regulated non-banks.

Basically, Fedcoin is advancing and is now in the testing stage:

The 12-week PoC will test a version of the RLN design that operates exclusively in U.S. dollars where commercial banks issue simulated digital money or “tokens” – representing the deposits of their own customers – and settle through simulated central bank reserves on a shared multi-entity distributed ledger.

Some of the largest financial institutions are involved in this 12-week program:

BNY Mellon, Citi, HSBC, Mastercard, PNC Bank, TD Bank, Truist, U.S. Bank and Wells Fargo.

Plus:

The technology is being provided by SETL with Digital Asset, powered by Amazon Web Services. Swift, the global financial messaging service provider, is also participating in the initiative to support interoperability across the international financial ecosystem.

From Bitcoin to Dogecoin, there seems little long term hope for those who love privacy and autonomy when the largest corporations and fintech firms work with the Federal Reserve to roll out a Central Bank Digital Currency (CBDC).

Would you like to know who else is was working with the Feds? Courtesy Coindesk:

Former FTX CEO Sam Bankman-Fried was, until last week, a major political donor – he gave $5.2 million to U.S. President Joe Biden’s presidential campaign and spent another $40 million supporting mainly Democratic candidates ahead of the November midterm elections – and an influential figure in Washington.

Bankman-Fried regularly met with regulators and lawmakers, weighing in on how the crypto industry should be regulated. He was a vocal supporter of one bill, in particular: the bipartisan Digital Commodities Consumer Protection Act (DCCPA), a still-in-progress bill…

We know for certain CBDCs are coming, as well as more regulation. And given the trajectory of both, a cashless society is too. What is less certain is whether or not Sam Bankman-Fried, for his culpability in what may amount to one of the largest thefts of all time, will ever see jail time. 

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Mises is the Solution to FTX-Scams

11/17/2022Tho Bishop

Check out this clip from Caitlin Long of Custodia Bank at a Bitcoin conference last year, explaining the dangers of highly leveraged crypto exchanges like FTX. Long calls out the practices of Sam Bankman-Fried, while sharing a stage with the disgraced crypto trader.

The Solution to FTX? Read Mises

Why was Caitlin able to see what most of the financial world, including major financial institutions, couldn't? She's read her Ludwig von Mises. As she explains, there is a fundamental difference between "commodity money" and "circulation money," which Mises calls "fiduciary media" in his treatise A Theory of Money and Credit

Written over 100 years ago, the consequences of leveraged fractional reserve banking and the artificial increase in credit remain. Mises's work remains vital in a world of hedonistic central banks and a financial world shaped by the dangerous fallacies of bad economics.

In the case of FTX, we have an exchange without the backing of the state, though one whose CEO attempted to gain regulatory capture with donations to powerful politicians and their pet ideological causes. In classic beltway-style, Bankman-Fried's failings are now being used by power-hungry politicians to promote the very legislation he advocated, at the expense of responsible actors like Long. Ultimately though, the same dangerous economic views underpinning his approach to crypto continue to guide the globe's traditional financial system. 

The only way out is an ideological revolution into how civilization considers the vital topic of money and banking.

As Mises noted in this important work, "No very deep knowledge of economics is usually needed for grasping the immediate effects of a measure; but the task of economics is to foretell the remoter effects, and so to allow us to avoid such acts as an attempt to remedy a present ill by sowing the seeds of a much greater ill for the future."

Get your copy of Theory of Money and Credit today from the Mises Bookstore.

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Recession Coming to the UK

11/15/2022Robert Aro

A house of cards. A sandcastle. Dominoes. Lots of imagery available to describe our global, socialist economic system. Waiting for a crisis is one thing, considering a way out is another. Watching news from other countries provides signs of things to come which helps diagnose the worldwide problem. From CNBC:

The U.K. economy contracted by 0.2% in the third quarter of 2022, signaling what could be the start of a long recession.

Even in other countries, we see the same will they or won’t they statistical revision game being played, as explained:

The contraction does not yet represent a technical recession — characterized by two straight quarters of negative growth — after the second quarter’s 0.1% contraction was revised up to a 0.2% increase.

If it weren’t for the revision of the Q2 data, the UK would be in a technical recession. What does it matter? Recession or no recession, anecdotally, it’s fair to say few are confident about the state of their nation or economy. 

The learning opportunity comes from seeing how life in the UK mirrors life in America, with financial experts and planners offering few solutions (that stem from the 80’s) to monetary problems.

The country faces a historic cost of living crisis, fueled by a squeeze on real incomes from surging energy and tradable goods prices. The central bank recently imposed its largest hike to interest rates since 1989 as policymakers attempt to tame double-digit inflation.

In addition to rate hikes:

U.K. Finance Minister Jeremy Hunt will next week announce a new fiscal policy agenda, which is expected to include substantial tax rises and spending cuts. Prime Minister Rishi Sunak has warned that “difficult decisions” will need to be made in order to stabilize the country’s economy.

One economist was also cited saying:

...the sharp rise in mortgage rates, and the very early signs of house price declines, point to weaker building activity through next year.

In response to rising prices, we’re offered rising rates, rising taxes and spending cuts, with falling home prices as one of the many side effects. It must be mentioned that these economic problems cannot be fixed by a magical combination of the best tax policy coupled with a mythical optimal interest rate.

Those who seem ignorant of the Austrian Business Cycle Theory, like those in the mainstream media, always leave something to be desired, i.e. an explanation for these periods of inexplicable economic booms followed by periods of inexplicable economic bust.

They normally blame price increases on some exogenous shock, as CNBC blames the problem on an increase in “surging energy and tradable goods prices,” yet this lacks depth and honesty. To them, for some unknown reason, all prices just randomly increased.

It compounds, as to solve the mystery, central banks must then raise rates. With little proof of past successes nor assurances of future successes, we’re told that some time, normally around 30 to 40 years ago it worked swimmingly.

There probably is a technical recession in the UK already, as there probably is one in America. That statisticians play these games to avoid giving the title of recession is not surprising. What is surprising is just how long this game has been played. Ultimately, few remedies are available. Either we change the system from within, or remove ourselves from the system entirely; if not by internal change or external flight, eventually we’ll be consumed by it.

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